DIGEST
OF RECENT DECISIONS FROM CANADA’S COURTS
Michael Hamilton, LL.B. E-mail: jandm@hfx.eastlink.ca
ADMINISTRATIVE LAW
JUDICIAL REVIEW – Judicial
review not appropriate remedy for
challenging tendering process of
Liquor Control Board of Ontario for
agency store.
Application for judicial review of a decision of respondent LCBO authorizing a
company, DM, to operate an agency store.
Applicant sought an order quashing the
decision. Under the Liquor Control Act
(Ont.) the board had the authority to establish government liquor stores and decide
where they would be located. The selection
of an agency store operator occurred
through a competitive procurement process. In 2007 LF, then owned by a different
company, was selected for a two year period in Lefroy, a small community. In August
2009 applicant entered into an agreement
to buy LF. It was advised that the LCBO
agency authorization could not be a condition of sale. In March 2010 a new Request
for Proposals was issued by the LCBO for
Lefroy. Applicant applied, but the store
authorization was issued to DM.
HELD: Application dismissed. Judicial
review was not an appropriate remedy as
there was no broad public interest that was
sufficient to justify judicial review of the
tendering process. The LCBO’s decision to
use the Request for Proposal process for
the selection of agency store operators was
a commercial decision that was not constrained by any statutory or regulatory
provision. It was not exercising a statutory
power of decision. Any complaint about
the fairness of the tendering process should
be determined as a matter of contract law.
In any event, applicant failed to show that
it had been treated unfairly or that any
competitor received an advantage over
another competitor by having more information. The decision of the selection committee to recommend the authorization be
given to DM was reasonable.
2169205 Ontario Inc. (c.o.b. Lefroy
Freshmart) v. Ontario (Liquor Control
Board), [2011] O.J. No. 2209, Ont. Div.
Ct., per Swinton J. (Then and Lederer
JJ. concurring), May 17/11. Digest No.
3108-001 (Approx. 8 pp.)
NATURAL JUSTICE – Respondent
board failed to give sufficient reasons in
allowing appeal from police officer’s
acquittal of disciplinary charge.
Appeal from a decision of respondent
board allowing an appeal from appellant’s
acquittal of a disciplinary charge. Appellant police officer investigated child abuse
allegations against respondent T. Appellant later informed two mothers who had
contact with T that he had evidence that T
had abused a child. Appellant was acquitted after a hearing. T appealed the acquittal. The board found that appellant said
more than was necessary and emphasized
the effects on T. Appellant argued that the
board’s reasons were insufficient.
HELD: Appeal allowed. The board’s
reasons were inadequate on key points.
The board appeared to have reweighed a
number of important facts, giving no def-
erence to the weights given to them by the
trial tribunal. The board did not explain
why appellant’s decisions about how to bal-
ance competing dangers were wrong, still
less unreasonable. It was not for the board
simply to decide what it would have done
were it the investigating constable. The
standard of conduct or duty which the
board used was necessity, which was not
the standard used by the trial tribunal. The
board’s reasons did not identify the requi-
site elements of discreditable misconduct,
nor the standard involved in meeting or
not meeting any of those elements.
BANKRUPTCY
& INSOLVENCY
CROWN CLAIMS – Canada Revenue
Agency not entitled to constructive trust
over assets of bankrupt.
Appeal by Canada Revenue Agency
(CRA) from the disallowance by the trustee
in bankruptcy of its claim to an interest in
property of the bankrupt under subs. 81(1)
of the Bankruptcy and Insolvency Act
(BIA). The appeal arose from GST refunds
claimed and received by the bankrupt from
CRA prior to the bankruptcy and also
refund claims in Quebec for Quebec Sales
Tax (QST) refunds. The bankrupt was a
GST and QST registrant. A registrant in
both provinces was entitled to a refund of
its input tax credits if they exceeded the tax
charged and collected by the registrant on
sales to its suppliers. The bankrupt filed
monthly GST returns for January through
July 2007. Included in the input tax credits
claimed was the amount of $1,554,854,
which was wrong and was, in fact, the QST
that had been paid by the bankrupt to its
suppliers. Both CRA and Ministry of Revenue in Quebec (MRQ) determined that
the bankrupt was entitled to a refund of
GST and QST based on those input tax
credits. After MRQ informed CRA of the
mistaken claim, CRA sought a declaration
that the QST refund was its property.
HELD: Appeal dismissed. MRQ deter-
mined that the bankrupt was entitled to a
QST refund of $1,544,854 prior to the
bankruptcy. The account receivable was an
asset of the bankrupt. CRA’s claim was
based on a claim for unjust enrichment
and the three elements for that cause of
action had been met. The bankrupt was
enriched when it received the refund based
upon an incorrect return. CRA was
deprived of that refund and there was no
juristic reason for the payment. A con-
structive trust was a remedy that may be
ordered for compensating an unjust
enrichment. However, there was not a suf-
ficient link between the overpayment
made by CRA to the bankrupt and the
receivable owing by MRQ that would per-
mit the imposition of a constructive trust
on the MRQ payable. The unjust enrich-
ment was not caused by the bankrupt
being entitled to a QST refund from MRQ.
It was caused by the bankrupt making an
improper claim against CRA and receiving
a refund based on that improper claim.
CRA was seeking to obtain a constructive
trust over assets of the bankrupt to which
it provided no contribution. It was limited
to its unsecured claim.
PROPERTY OF BANKRUPT –
Trustee of bankrupt car dealership
allowed to assign dealership agreement
to third party.
Appeal from a decision granting permission to a trustee in bankruptcy to sell
an auto dealership agreement to a third
party over the objections of appellant. The
bankrupt operated a franchise dealership
with appellant pursuant to the terms of a
written dealership agreement. The dealership ceased operations after appellant discovered a large defalcation apparently
made by a senior employee of the dealership. A receiver was appointed. Notwithstanding the objections of appellant, the
chambers judge granted an order authorizing the trustee to market the dealership.
After the dealership was placed into bankruptcy, the judge approved the trustee’s
application to assign the rights and obligations of the bankrupt under the dealership
agreement to the ultimate purchaser pursuant to s. 84.1 of the Bankruptcy and
Insolvency Act. The judge concluded that
the dealership agreement was assignable.
HELD: Appeal dismissed. There was no
fundamental breach of the agreement.
Appellant’s refusal to co-operate with the
sale was the only reason the agreement
could not be performed. Appellant, as fran-chisee, was capable of carrying on the commercial purpose of the dealership agreement but chose not to do so, which fell far
short of meeting the test for fundamental
breach. Upon the reopening of the dealership, there was nothing to suggest that
appellant would not be able to carry on the
commercial purpose of the dealership
agreement. The effect of s. 84.1 was to
override the common law unilateral right
of the innocent party to the contract to
accept the repudiation and end the contract. Nothing in the agreement rendered it
unassignable, either because it was said to
be personal or not to be assigned without
appellant’s consent.
Ford Credit Canada Ltd. v. Welcome
Ford Sales Ltd., [2011] A.J. No. 592,
Alta. C.A., per Ritter, Martin and Bielby
JJ.A., May 27/11. Digest No. 3108-004
(Approx. 15 pp.)
CHARTER OF RIGHTS
& FREEDOMS
ARBITRARY DETENTION – Arrest
of accused on basis of information from
confidential informants was lawful.
Appeal from acquittal of accused on two
counts of possession for the purpose of
trafficking and possession of proceeds of
crime. Three previously reliable confiden-
tial informants separately told police that
accused took orders for cocaine and Dilau-
did by cell phone and delivered the drugs
from home using either a white van or
black truck. Police arrested accused follow-
ing limited surveillance of him in his van in
the parking lot of a local Tim Horton’s.
Police observed accused park and talk to an
individual in the next vehicle. Both vehicles
left the parking lot without either driver
exiting their vehicle. Police stopped and
arrested accused in an adjoining parking
lot. At the detachment, he was unable to
reach his lawyer and declined the oppor-
tunity to call another. Accused surrendered
packages of cocaine and Dilaudid after
being told he was going to be strip searched.
A cell phone matching the number given
by the informants was seized from the van.
The trial judge found that police violated
accused’s ss. 8 and 9 Charter rights, as the
arrest and ensuing search were unlawful.
The evidence was excluded and accused
was acquitted.
PRESUMPTION OF INNOCENCE –
Section 40 of the Investment Canada
Act did not violate subs. 11(d) of Charter
because not penal in nature.
Appeal from the dismissal of appellant’s
motion for an order that s. 40 of the
Investment Canada Act violated subs.
11(d) of the Charter. In September 2007
appellant submitted an application for
review under the Act to obtain ministerial
approval of its proposed investment in and
acquisition of control of Stelco’s Canadian
business. In support of the application
appellant provided 31 undertakings,
including two in relation to employment
and production levels. The acquisition was
approved. On May 5, 2009 the minister
sent a demand pursuant to s. 39 of the Act
advising appellant that it was in contravention of the employment and production
undertakings and requested that appellant
cease the contraventions and remedy the
default. On July 17, 2009 respondent attorney general applied under s. 40 of the Act
for an order directing appellant to comply
with the two undertakings and a penalty of
$10,000 per day, per breach of the under-
